Blockchain technology was born with Bitcoin when it became the censorship-resistant, transparent, distributed ledger that ensured every transaction was validated. The structure alone of the ledger was enough to eventually start pushing the technology into different use cases beyond cryptography, though it took a while for any other industry to see a benefit. Once supply chains and banks started to see what blockchain could offer, the industry started booming. In a report from The Wall Street Journal, it looks like the hype is just about over, as the market discovers “mundane usefulness” involving distributed ledger implementation.
Speaking to the current situation of the blockchain, Mike Orcutt called the 2017 state of the technology to be a disruptive change in the industry. He called the technology a “disappointment” in 2018, while this year it is more “mundane” than anything. Orcutt reiterates that this year it will not “make as much noise,” but it looks like it will become, “more useful.”
In the WSJ, the writer explains how technologies with his kind of transformative potential usually have adoption cycles that they go through, and Orcutt’s analysis simply breaks down the whole cycle into three years. There has been substantial hype around blockchain, but that’s not what will keep it going. The real question is, will blockchain have the potential to be implemented over time? Experts believe that blockchain can meet the future demands of the industries that have begun to adopt it.
There are many pilots that have been filling up the blockchain tech industry over time, but this is going to be the time when the pilots finally reach a production stage. The article that Orcutt wrote for MIT Technology Review states that there are multiple companies starting production this year, like Walmart with IBM Corp.
However, there are two blockchain-based platforms that have been planning to enter production with their trading platforms, like the Intercontinental Exchange’s launch of Bakkt. Bakkt will be allowing consumers and institutions to get involved with digital assets by buying, selling, storing, and spending them. A few months after this plan was announced, Fidelity took similar steps by developing Fidelity Digital Assets, which offered similar services.
Orcutt points out that blockchain tech is evolving in a way that distributed applications tied to smart contracts see automatic execution. As the smart contracts are stored in the blockchain, they become irreversible, and the blockchain reduces the smart contract’s need for an intermediary to monitor it. However, he reiterates that the only way that these smart contracts have the power to do “anything really useful” is with a connection to events in the real world. For instance, someone could get a flight insurance policy that will pay out if a flight is canceled. The only way to connect these events is with a network of data that can connect, like Chainlink’s tamper-proof system that provides the blockchain data to the smart contracts.
Smart contracts also heavily rely on legal applications, considering that they are still a legally-binding contract. Multiple companies are looking to eradicate, or at least minimize, the costs associated with enforcing these agreements, like Open Law. With blockchain technologies, these companies are able to make the connection that immediately enforces the consequences or benefits of the smart contract.
At this point, the attention is not on Bitcoin the way that these enthusiasts believed it would be, considering how many crypto assets have branched out. The role that cash plays in the industry is becoming smaller, and many banks have been embracing the technology that Bitcoin introduced with their own new products. While this has not quite unfolded like it was originally meant to, the result could still be the positive change that financial and other industries truly needed.